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The channel’s role in Salesforce’s latest revenue surge

The channel’s role in Salesforce’s latest revenue surge

Analysts point to the partner input behind Saleforce’s most recent financials

Salesforce has released its results for the three months ending 31 October, revealing a 25 per cent year-on-year surge in revenue for the period, to US$2.68 billion.

At the same time, the US-headquartered software vendor reported a major turnaround in net profit, notching up a tally of US$51.4 million for the quarter ending October compared to a net loss of US$37.3 million the same period last year.

Meanwhile, deferred revenue on the company’s balance sheet as of October 31, 2017 was US$4.39 billion, an increase of 26 per cent year-over-year. Deferred revenue is a metric associated with subscription-based software business models.

“Salesforce delivered a record third quarter, and we're on a path to exceed $20 billion faster than any enterprise software company in history," Salesforce chairman and CEO, Marc Benioff, said in a statement.

According to Technology Business Research analyst, Kelsey Mason, much of the company’s successes can be attributed to its global partner network.

“Partners have played a large part in Salesforce’s ability to be seen as a trusted advisor to customers’ digital transformations, with half of new business being generated through the ecosystem,” Mason said.

“This engagement from partners helps Salesforce contain its sales and marketing expenses, which in turn enabled the company to elevate its operating margin higher than it has been in the last seven years,” she said.

At the same time, Mason suggested that, in addition to cost containment, the vendor’s margin improvements during the period were driven by “persistent revenue growth”.

“This growth can be attributed to multiproduct deals - often spurred from industry-focused engagements - as well as global expansion and adoption of artificial intelligence,” she said.

The company also used its earnings announcement on 21 November to reveal a C-level shuffle, naming Bret Taylor, the former CEO and co-founder of Quip, a Salesforce acquisition, as president and chief product officer.

At the same time, Alex Dayon, the founder of yet another Salesforce acquisition, InStranet, was named as president and chief strategy officer.

The latest financials come roughly two months after the vendor revealed its venture wing was launching a US$50 million fund to invest in start-ups employing artificial intelligence.

"There's a tremendous surge in companies who are providing unique AI innovations," John Somorjai, executive vice president of Salesforce Ventures, said at the time. "We want more of those companies to do these innovations on Salesforce's platform."



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